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Charter tops US cable's RDOF take

Charter Communications was the big cable market winner in Phase I of the US Rural Digital Opportunity Fund (RDOF)... and it wasn't even close.

According to FCC results issued today, Charter qualified to receive $1.2 billion in federal government support for deployment plans spanning some 1.1 million locations.

Several other US cable operators also participated in the bidding and came away with a few spoils. Here's a representative list of the winning bidders in the Phase I RDOF auction that are obviously cable operators or are known to have cable network operations.

Table 1:

Bidder Assigned Support Locations Assigned Number of States
CCO Holdings (Charter Communications) $1.22 billion 1.05 million 24
Consolidated Communications $58.87 million 27,021 7
Cox Communications $6.63 million 8,212 9
Atlantic Broadband Finance Inc. $5.54 million 1,638 1
Shenandoah Cable Television $5.05 million 8,642 2
Midcontinent Communications (Midco) $4.97 million 6,506 3
Mediacom Communications $2.25 million 9,752 4
Altice USA $849,800 5,220 6
DTC Cable $834,897 481 1
Nova Cablevision $785,400 155 1
Heart of the Catskills Comm. Inc. (dba MTC Cable) $398,857 188 1
Allen's T.V. Cable Service Inc. $345,624 254 1
Source: FCC

Charter's RDOF take was big, but it could have been even bigger.

"Charter was the biggest winner, but won fewer markets than we expected," the analysts at New Street Research explained in a note following today's results. "We have looked at the auction as a compelling way for Cable companies, specifically Charter, to expand their footprint with compelling returns."

US cable operators, they pointed out, have already benefitted from robust broadband subscriber growth so far in 2021. "[T]he RDOF Auction is an opportunity for Cable to further accelerate subscriber growth."

Quiet period continues

Charter signaled its intention to join the bidding for the RDOF back in July. According to Charter's original RDOF plan, the operator has proposed to use a blend of hybrid fiber/coax (HFC) and fiber-to-the-premises network deployments, depending on the location.

Citing a quiet period that still stands following today's results, Charter Chairman and CEO Tom Rutledge was tightlipped about the RDOF auction in a talk at a UBS Global TMT Virtual Conference. However, he did address the general opportunity Charter sees in broadening its reach in rural areas.

"We think it's good for us financially to extend our broadband network ... to as many people as possible," Rutledge said. "We think working with the federal, local and state authorities to improve access to poles and rights-of-way [and] proper subsidies can get it done ... We think it can be done in an economically efficient way."

The Phase I RDOF auction covered about 5.2 million locations and $9.2 billion in subsidies, well below the $16 billion that had been set aside. The remaining $6.8 billion not allocated this round will be rolled into the future Phase II RDOF auction.

Winners receive 10 years of subsidy payments, dispersed in equal monthly installments, and six years to deploy to the winning locations.

The FCC said 99.7% of the locations in Phase I will receive broadband speeds of at least 100 Mbit/s down and 20 Mbit/s up, with 85% poised to get 1-Gig speeds.

New Street Research said payments will start when bidders become authorized to receive support, possibly by Q2 2021.

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— Jeff Baumgartner, Senior Editor, Light Reading

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